Damages from the destruction of warehouses due to Russian attacks are proposed to be distributed among businesses individually

The losses that producers and retail chains suffer due to the destruction of warehouse infrastructure as a result of Russian attacks are proposed to be distributed on an individual basis. The Ministry of Agrarian Policy believes that there cannot be a universal formula for all cases.

This was stated by the Minister of Agrarian Policy and Food Taras Vysotsky, RBC-Ukraine reports with reference to Interfax-Ukraine.

According to the minister, it is wrong to automatically divide losses between producers and retailers in a 50/50 ratio or to completely place them on one of the parties.

Vysotsky explained that for different groups of goods, the cost price, profitability and share of each participant in the supply chain differ.

What will determine the distribution of losses

In each individual situation, it is proposed to take into account several factors:

who is the supplier and the retail chain;

to which segment does the product belong;
at what stage was the product transferred to another participant in the chain;
what share of profit and margin did each participant have;
specifics of logistics and storage of goods.

The Minister emphasized that the Ministry of Agrarian Policy does not have access to bilateral economic agreements between companies, therefore it cannot determine who should compensate for losses in a particular case.

The issue may be regulated by law

According to Vysotsky, the issue of distribution of losses may be regulated by law in the future.

The relevant draft law has already passed the first reading in the relevant parliamentary committee. The Ministry of Agrarian Policy supports its further adoption and is working on clarifications to the document.

So far, one of the available mechanisms remains recording the damage caused in the international Register of Damage Caused by the Aggression of the Russian Federation against Ukraine.

Its goal is to record the losses caused for possible further compensation.

Long-term solution – insurance of war risks

Another possible compensation mechanism at the Ministry of Agrarian Policy is the creation of a national system of insurance of war risks.

The Ministry of Economy is working on its launch.

It is assumed that such a system will allow to compensate for the losses caused by the war, without the need to determine each time which of the participants in the supply chain should cover them.

Russia attacks warehouses and logistics centers

Russian troops regularly attack the warehouse and logistics infrastructure of Ukrainian businesses.

Logistics centers, warehouses and production facilities of large companies and retail chains have already been hit.

Due to the threat of repeated attacks, retailers have begun to rebuild their goods storage system and switch to a network of smaller warehouses.

This is especially true for refrigerated products: according to the data provided, the costs of their transportation have increased by approximately 35–50%.

The State Property Fund has also begun to look for warehouse space that can be provided to businesses that have suffered as a result of Russian attacks.